Tax planning

Financial services conglomerate JPMorgan is expanding JPMorgan E-Tax — its Internet-based tax service providing institutional investors with global tax intelligence, rates and breaking news.

In spite of legal woes over its refund anticipation loan program, tax preparation services giant H&R Block recently announced that it had passed the 1 million mark with its tax refund card - a figure that it said could reach 3 million by the close of tax season.Block's Emerald MasterCard, a prepaid debit card issued through the company's H&R Block Bank, is issued to customers who are expecting a tax refund. Rather than waiting for refund checks or arranging for direct deposits of a refund to a bank account, taxpayers can acquire the card when the tax return is prepared.

Backed by a 20-year resume in claims experience, Redwood City, Calif.-based Camico Mutual Insurance Co. has identified the areas and sources of frequent tax claims lodged against CPAs.With tax season in full swing, here are some of the fruits of the company's experience with practitioner claims - and things to watch for as you wade through all those 1040s.

The Internal Revenue Service needs to do a better job of reviewing the non-cash charitable contributions deductions taxpayers are claiming.

The Internal Revenue Service has posted the 2006 Data Book on its Web site.

The Internal Revenue Service issued guidance identifying dozens of frivolous positions that taxpayers should avoid when filing their tax returns.The guidance lists 40 positions which have no basis for validity in existing law or which have been deemed frivolous by the U.S. Tax Court, or another federal court. If these or other frivolous positions are contained in a tax return, taxpayers could face a $5,000 penalty -- 10 times the previous maximum.

At least one in five workers eligible for the Earned Income Tax Credit will leave that money on the table this tax season, and Congress is looking to accountants and other tax professionals to help address the problem.During hearings before the House Ways and Means Oversight Subcommittee, congressional leaders said that while 22 million low-income families and individuals claimed EITC wage subsidies last year, millions more who are eligible for the tax credits don't receive them.

The Internal Revenue Service has rolled out its annual list of the 12 most blatant tax return scams. Topping the "Dirty Dozen" are fraudulent claims for the one-time Telephone Excise Tax refund. Also new to the list this year are abuses pertaining to:* Roth IRAs. Taxpayers should be wary of advisors who encourage them to shift under-valued property to these IRAs. In one variation, a promoter has the taxpayer move under-valued common stock into a Roth IRA, circumventing the annual maximum contribution limit and allowing otherwise taxable income to go untaxed.

The measures to close the tax gap offered by President Bush in his 2008 budget are somewhat modest, according to observers.The president's $2.9 trillion budget contains a number of legislative proposals to close the gap in four areas: by expanding information reporting, improving compliance by businesses, strengthening tax administration and expanding penalties.

Tax prep giant H&R Block Inc. announced that it has opened up shop in the online virtual universe known as Second Life.Second Life is entirely built and owned by its residents, who have created a 3-D world that includes homes, vehicles, nightclubs, stores, landscapes, clothing and games. Last month, the site passed the 4-million-account threshold, though many accounts are not active and some residents have multiple accounts.

A federal judge dismissed five counts of filing false tax returns, to go with four counts of money laundering, which had been levied against the self-proclaimed “Guru of Ganja.”Ed Rosenthal, a medical marijuana activist and columnist for High Times, had originally been arrested on three charges of growing pot. However, during his 2003 trial, he wasn’t allowed to cite in his defense the fact that the pot was for medical marijuana dispensaries -- a point which several jurors later said that the government should have allowed them to hear.

Edward A. Weinstein of New York will receive the New York State Society of CPAs’ Distinguished Service Award.

A ruling from the Internal Revenue Service -- that the workers who collect urine samples for drug testing are employees and not independent contractors -- could cost the NFL millions in benefits.

The Internal Revenue Service announced that through March 13, more than 2.6 million taxpayers have electronically filed their returns using the agency’s Free File program. TThough that’s about 4 percent drop from the number of returns filed during the same time last year.

Federal prosecutors have arrested a New York-based Internal Revenue Service agent on tax fraud charges, according to a published report.Harry Willner, 59, who has been an IRS agent for more than three decades, was charged with five counts of tax fraud on Monday. Federal prosecutors have accused him of cheating on his personal income taxes, as well as offering loopholes to other taxpayers.

The Canada Revenue Agency announced that Canadians should be able to resume e-filing their tax returns before the end of the week, after a computer glitch discovered last week put the processing of more than 1 million tax returns on hold.CRA Commissioner Michel Dorais said that the problem, a malfunctioning software patch, was not the work of hackers, or a computer virus, and did not threaten the security or privacy of taxpayer data. He said the agency’s services, including E-file, Netfile and a “My Account” feature should be back online no later than March 15. Dorais said that the data for any taxpayers who had already filed was still intact, and that the personalized account feature would allow taxpayers to track the progress made on their return.

A Goldman Sachs investment banker, who earned $115,000 in 2002, will not be able to take all of the $55,000 charitable contribution deduction she took for that tax year -- $49,000 of which she took for donations of used clothing to a thrift store.

In an early spurt of spring cleaning, I came across an ancient, yellowed clipping from the New York Post. Although there was no date on it, it is clearly from 1986, the year the Bears won the Super Bowl and Ronald Reagan got his tax reform. It tells the story of then-Treasury Secretary James Baker, who in his enthusiasm for both rap music and a simpler tax code, broke out into rhyming couplets during a rally to tout tax reform. His poetic achievement was based loosely on the Chicago Bears’ “Super Bowl Shuffle,” which members of the team recorded en route to their victory in Super Bowl XX, and which reached No. 41 on the Billboard charts before actually landing a Grammy nomination.

The U.S. Tax Court found that a non-CPA tax preparation and bookkeeping business is an accounting service and subject to the 35 percent tax applicable to qualified personal service corporations.A Las Vegas firm had argued that because it was not a public accounting firm, its employees didn’t perform services that required them to be CPAs and because state law doesn’t state that accounting services can only be performed by CPAs, it shouldn’t be defined as a provider of accounting services as outlined under Section 448(d)(2) of the tax code.

The Thomson Corp. announced that it has acquired CrossBorder Solutions, a tax software company whose products are used for the planning and compliance needs of corporations.